Rebounding From Allegations and Lawsuits with Compliance Programs

Governance, ethics and compliance continues to be a growing concern for both business and government.

Posted by Joe Gerard in Ethics & Compliance on June 23rd, 2010

Governance, ethics and compliance continues to be a growing concern for both business and government. It’s important for executives and other employers to understand that it’s becoming increasingly challenging to protect their company from a public ethics lapse. Even companies with the strongest ethics and compliance programs have faced lawsuits and allegations for violating policies and laws.

Many people often refer to the Enron example: before the collapse of Enron, the company had been recognized and praised for creating and implementing one of the most comprehensive ethics and compliance programs at that point in time. Former CEO and COO, Jeffrey Skilling, is now in prison and the company is no longer. So how could a company with an outstanding ethics and compliance program fall victim to ethical lapses?

Ethics and compliance are extremely challenging tasks in the workplace, as it’s the responsibility of every single employee to uphold company values and make ethical choices.

On the Rebound

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For many companies, ethics lapses are a wake-up call, drawing attention and focus back to compliance and ethics goals. In one of our previous posts, “Best Practices in Ethics Recovery: Tyco,” and an Ethisphere magazine article, “Ones to Watch: Developing a Strong Compliance Program After a Record Fine, both articles mention the introduction of Ed Breen as Tyco’s CEO. This introduction lead to sweeping changes at Tyco, including replacing the previous board of directors and letting go of 290 of the 300 corporate employees. Tyco was able to regain their reputation and public image thanks to the ethical overhaul conducted by Breen and his team.

The article in Ethisphere magazine, “Ones to Watch: Developing a Strong Compliance Program After a Record Fine,” discusses the constant evolution of ethics and compliance. The article also discusses how some companies end up developing best in class programs or building on existing programs to create a competitive advantage within their respective industries. Ethisphere uses Pfizer as an example of a company rebounding from a very a public investigation- and fine,  related to ethics and compliance violations:

“One way Pfizer is working to get ahead of its peers is by increasing disclosure around payments made to doctors. Pfizer’s Corporate Integrity Agreement (CIA) required them to begin disclosing financial relationships with doctors. However, Pfizer announced it would go beyond the CIA requirements and will begin disclosing payments sooner than required. Pfizer also will be the first pharmaceutical company that discloses payments to researchers to perform clinical trials.”

The Pfizer example provided by Ethisphere demonstrates the approach taken by many companies that have suffered in the public eye. For fear of future failures, companies previously found guilty of ethics and compliance violations tend to go above what’s required of them. A lot of companies increase their efforts surrounding transparency, risk assessments and redesigning employee training programs, in order to minimize the opportunity for future ethics and compliance violations. Ethics and compliance programs require updates and regular evaluations in order to remain current with the issues faced by companies as times change.

Response time and actions taken to right the wrongs can influence the damage done to a company’s reputation. It takes a significant amount of time to build back public trust. Depending on the type of violation that occurred, it’s possible for some organizations to eventually overcome public backlash. I don’t like to keep making an example out of BP, however, it’s relevant to the point I am trying to make. Many people have criticized the company’s reaction time and tactics deployed in regards to capping the oil spill in the Gulf. Had the response by BP been quicker and initial techniques used to capture the leaking oil worked, BP may not be facing the level of scrutiny they are currently dealing with.

Ethics and Compliance Investigation Software

With the provisions outlined in the UK Bribery Act and US Foreign Corrupt Practices Act, legislation is being developed to hold companies responsible for the actions of their employees. These acts also include requirements for implementing adequate processes to prevent future offenses. In order to mitigate risk and catch policy/legal violations before they wind up in court, investigation software can be implemented to help HR departments and investigative units properly manage their case loads. i-Sight Investigation Software can be configured to meet the unique demands and reporting structures of any organization to ensure compliance.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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